Business and Global Poverty

How Misconceptions Can Be a Barrier to Effective Action

In the summer of 2006, Dennis Moberg went to El Salvador as part of a faculty immersion group that lived and worked with the mostly poor residents of the country. The experience left him with the feeling that much of the discussion about global poverty is “separate from the human experience on the ground” and wanting to do something about it.

Eventually he decided the best way to do that was to translate his experience for his scholarly colleagues in the business ethics community. Moberg, the Gerald and Bonita A. Wilkinson Professor of Management at the Leavey School of Business, had credibility in the field, having served two terms as president for the Society of Business Ethics. He is writing a book about it, and this August at the annual meeting for the Society of Business Ethics in Chicago, he will present a paper, “Mental Models that Impede Business’ Role in Global Poverty Alleviation, written with Laura Hartman, Patricia Werhane, and Scott Kelley.

“The target audience for the paper and the book is business decision makers,” he says, “and we want to encourage a deep dialogue rather than a superficial one on global poverty issues.”

Part of doing that is identifying and refuting common business misconceptions about poverty and what can be done about it. Moberg and his colleagues identify six such “mental models” in the paper:

That poverty is defined by an income of $2 a day or less. This can make it seem like a strict revenue issue and lead business people to miss other key factors, such as access to reliable banking services, that can greatly expand opportunity.

That global poverty is an unsolvable problem. More likely, says Moberg, it is a “wicked problem” that is difficult to solve but that can be attacked in a variety of ways that involve multi-disciplinary analysis, stakeholder engagement, and small-scale experiments.

That it is a human-rights problem, which tends to put the focus on fulfilling a need, rather than on developing responses from non-governmental players and encouraging private economic activity.

That the global poor are incapable. Not so, says Moberg, citing as just one example a night shelter for street children in Delhi, India, that offers the children a bank run by teenagers, who are demonstrating considerable business acumen.

That making money from the poor is unseemly. In fact, says Moberg, it can be a basis for providing economic opportunity. For instance the S.E. Johnson Company set up poor people in Africa to run cleaning businesses. The cleaners use Johnson’s products in their work, which profits the company, but their new business enables them to make a better living.

That cooperation is unlikely between multinational enterprises and non-governmental (NGO) public organizations. It’s true, he says, that the public sector tends to be suspicious of business, while large companies tend to regard the NGOs as part of the regulatory environment. But there are success stories, such as Barclay’s Bank working with an informal group of Nigerian moneylenders to offer an expanded set of financial products for people living at the base of the economic pyramid.

Businesses can do much more to relieve global poverty through their own work, Moberg says, if they can but develop the “moral imagination” to evaluate opportunities outside their set mental models, as in some of the examples above.

“One thing that keeps me going is how inspirational these stories are and how much impact they have on peoples’ lives,” Moberg says. “There’s a lot of economic activity among the poor; whatever multinational businesses can do to give them a step up is important and we ought to be doing it. It’s not about charity, it’s about economic activity that will be sustainable through tough times.”